Core Viewpoint - The report from Shenwan Hongyuan indicates a downward revision of earnings per share forecasts for CSPC Pharmaceutical Group due to increased R&D investment, with target price adjusted from HKD 12.7 to HKD 9.7, reflecting a potential upside of 31% while maintaining a buy rating [1] Group 1: Financial Performance - For the first three quarters of 2025, CSPC's revenue decreased by 12.3% year-on-year to CNY 19.89 billion, and net profit attributable to shareholders fell by 7.1% to CNY 3.51 billion, with Q3 showing a revenue increase of 3.4% to CNY 6.62 billion and net profit growth of 27.2% to CNY 0.964 billion, aligning with expectations [2] - The overall gross margin for the first three quarters declined by 4.9 percentage points to 65.6%, with the contribution from the prescription drug segment dropping from 82.3% to 77.7% [2] Group 2: Prescription Drug Segment - The sales of the prescription drug segment for the first three quarters fell by 17.3% to CNY 15.45 billion, including licensing revenue of CNY 1.54 billion, while Q3 sales rebounded to CNY 5.20 billion, marking a 1.6% year-on-year increase and a 9.6% quarter-on-quarter increase [3] - The sales of oncology products in the first three quarters plummeted by 56.8% to CNY 1.65 billion, accounting for 10.7% of the prescription drug segment's revenue, down from 20.4% in the previous year [3] - The raw material drug business saw a 22.3% year-on-year increase in vitamin C raw material revenue to CNY 1.79 billion, while antibiotic raw material revenue slightly decreased by 3.7% [3] Group 3: R&D and Pipeline - CSPC's R&D expenses increased by 7.9% year-on-year to CNY 4.19 billion, with the R&D expense ratio rising by 3.9 percentage points to 21.0% [5] - The company has 28 key pipelines in II/III phase clinical trials, nine products in phase II, and approximately 40 products in phase I, covering both oncology and non-oncology areas [5] - The SYS6010 (EGFR ADC) has received fast track designation from the FDA and breakthrough therapy designation from NMPA, with multiple clinical trials ongoing and data readouts expected in 2026 [4]

Core Viewpoint - CICC maintains "outperform" rating for CSPC Pharmaceutical Group (01093), highlighting improvements in the company's prescription drug business and strong growth in respiratory and cardiovascular sectors [1] Performance Summary - For the first three quarters of 2025, the company reported revenue of 19.891 billion yuan, a year-over-year decrease of 12.3%, and a net profit attributable to shareholders of 3.511 billion yuan, down 7.1% year-over-year. Adjusted net profit was 3.079 billion yuan, a decline of 23.0% year-over-year, aligning with CICC's expectations. In Q3 2025, revenue reached 6.618 billion yuan, showing a year-over-year increase of 3.4% and a quarter-over-quarter increase of 5.7%, indicating stabilization in performance. The prescription drug revenue in Q3 2025 was 5.202 billion yuan, with year-over-year growth of 1.6% and quarter-over-quarter growth of 9.6% [2] Business Segment Performance - In Q3 2025, revenue from various therapeutic areas included: - Neurological diseases: 1.914 billion yuan (YoY -4.2%) - Oncology: 594 million yuan (YoY -47.2%) - Anti-infection: 826 million yuan (YoY -8.6%) - Cardiovascular diseases: 474 million yuan (YoY +17.8%) - Respiratory diseases: 320 million yuan (YoY +72.7%) - Digestive system: 248 million yuan (YoY +13.7%) - Other areas: 362 million yuan (YoY +25.6%) - The company’s raw material drug revenue was 1.415 billion yuan, with a year-over-year increase of 10.5% and a quarter-over-quarter decrease of 6.4% [2] R&D Progress - The company is advancing its innovation-driven strategy, with significant progress in its small nucleic acid pipeline. Key projects include PCSK9, expected to enter Phase III by the end of 2025, and other clinical projects targeting chronic diseases such as blood lipid and blood pressure management. The company is also exploring targeted delivery for eye, lung, fat, and muscle diseases. Notable in-development products include anti-HER2 monoclonal antibodies and EGFR ADCs [3] Overseas Business Development - The company is enhancing its business development strategy and has established an international licensing platform. In the first three quarters of 2025, it achieved licensing revenue of 1.540 billion yuan. In Q3 2025, the company licensed SYH2086 (an oral small molecule GLP-1) to Madrigal Pharmaceuticals for global development and commercialization outside of China, which includes an upfront payment of 120 million USD and potential milestone payments of up to 1.955 billion USD, along with double-digit sales royalties. The company has additional innovative products in its pipeline that are expected to lead to further licensing opportunities and milestone revenue recognition [4] Profit Forecast and Valuation - Considering increased R&D investments, CICC has lowered its net profit forecasts for 2025 and 2026 by 12% and 15% to 4.760 billion yuan and 5.353 billion yuan, respectively. The current stock price corresponds to a price-to-earnings ratio of 17.1 times for 2025 and 15.0 times for 2026. The "outperform" rating is maintained, with a target price reduction of 15% to 11.00 HKD, reflecting a price-to-earnings ratio of 24.4 times and 21.4 times for 2025 and 2026, respectively, indicating a potential upside of 42.5% [5]

Core Viewpoint - Company maintains "outperforming the industry" rating for CSPC Pharmaceutical Group (01093), citing improvements in its prescription drug business and strong growth in respiratory and cardiovascular sectors [1] Performance Summary - Company reported 1-3Q25 revenue of 19.891 billion, down 12.3% YoY, and net profit attributable to shareholders of 3.511 billion, down 7.1% YoY, with adjusted net profit of 3.079 billion, down 23.0% YoY, aligning with expectations [1] - 3Q25 revenue reached 6.618 billion, showing a 3.4% YoY increase and a 5.7% QoQ increase, indicating stabilization in performance [1] - Prescription drug revenue in 3Q25 was 5.202 billion, with a YoY increase of 1.6% and a QoQ increase of 9.6% [1] - Breakdown of 3Q25 prescription drug revenue: - Neurological diseases: 1.914 billion (YoY -4.2%) - Oncology: 0.594 billion (YoY -47.2%) - Anti-infection: 0.826 billion (YoY -8.6%) - Cardiovascular: 0.474 billion (YoY +17.8%) - Respiratory: 0.320 billion (YoY +72.7%) - Digestive: 0.248 billion (YoY +13.7%) - Other fields: 0.362 billion (YoY +25.6%) [1] - Raw material drug revenue in 3Q25 was 1.415 billion, up 10.5% YoY but down 6.4% QoQ [1] R&D Summary - Company continues to drive innovation with ongoing development of its small nucleic acid pipeline, with PCSK9 expected to enter Phase III by the end of 2025 [2] - Other clinical projects include LPa, AGT, ANGPTL3, and C5, targeting key chronic diseases such as dyslipidemia and hypertension [2] - Company is also exploring targeted delivery for eye, lung, fat, and muscle applications [2] - Key pipeline products include Anlotinib (HER2 bispecific), SYS6010 (EGFR ADC), and SYS6091 (HER2 ADC), all progressing well [2] Overseas Business Development Summary - Company is enhancing its business development strategy and building an international licensing platform [3] - In 1-3Q25, the company achieved licensing revenue of 1.540 billion, with a significant deal involving the licensing of SYH2086 (oral small molecule GLP-1) to Madrigal Pharmaceuticals, including a $120 million upfront payment and potential milestones of up to $1.955 billion [3] - The company has several innovative products in its pipeline, such as EGFR ADC and SiRNA series, which are expected to lead to more licensing agreements and milestone revenue recognition [3] Profit Forecast and Valuation - Due to increased R&D investment, the company has lowered its net profit forecasts for 2025 and 2026 by 12% and 15% to 4.760 billion and 5.353 billion, respectively [4] - Current stock price corresponds to a P/E ratio of 17.1x for 2025 and 15.0x for 2026 [4] - The company maintains its outperforming rating while reducing the target price by 15% to HKD 11.00, reflecting a P/E of 24.4x and 21.4x for 2025 and 2026, respectively, indicating a potential upside of 42.5% [4]

Investment Rating - The report maintains a "Buy" rating for the company [6][8]. Core Viewpoints - The company experienced a revenue decline of 18.5% year-on-year, with total revenue of 13.273 billion yuan and a net profit decrease of 15.6% to 2.548 billion yuan, primarily due to the impact of centralized procurement [1]. - The sales of traditional pharmaceutical products faced significant pressure, with a 24.4% decline in revenue to 10.248 billion yuan, and a 32.3% drop in product sales when excluding licensing income [2]. - The company is expected to enter a new growth phase with multiple innovative drugs set to be launched between 2025 and 2027, including SYS6010, KN026, and others [2]. - Licensing income has become a strong revenue and profit source, with a notable 120 million USD upfront payment for SYH2086 expected to contribute to future earnings [2]. - The company has initiated overseas clinical trials for SYS6010, which has received multiple regulatory recognitions, including Fast Track Designation from the FDA [3]. - The HER2 bispecific antibody KN026 has had its new drug application accepted by the Chinese National Medical Products Administration, showing promising clinical trial results [4]. Summary by Sections Financial Performance - For the first half of 2025, the company reported revenues of 13.273 billion yuan and a net profit of 2.548 billion yuan, reflecting a year-on-year decrease of 18.5% and 15.6%, respectively [1]. Traditional Pharmaceutical Business - The traditional pharmaceutical business generated 10.248 billion yuan in revenue, down 24.4% year-on-year, with a 32.3% decline in product sales when excluding licensing income [2]. Innovative Drug Pipeline - The company plans to submit multiple innovative drugs for approval from 2025 to 2027, including SYS6010 and KN026, which are expected to drive future revenue growth [2][4]. Licensing Income - Licensing income has significantly increased, with the company securing 6 business development deals and expecting continued contributions from these agreements [2]. Clinical Trials and Regulatory Approvals - SYS6010 has received Fast Track Designation from the FDA and Breakthrough Therapy Designation from NMPA, indicating strong regulatory support for its clinical development [3]. - The KN026 application is based on positive results from a pivotal clinical trial, demonstrating improved efficacy and safety compared to existing treatments [4]. Profit Forecast - The company is projected to achieve revenues of 28.398 billion yuan, 30.145 billion yuan, and 32.242 billion yuan, with net profits of 5.521 billion yuan, 5.940 billion yuan, and 6.457 billion yuan from 2025 to 2027 [6].

Core Viewpoint - CICC maintains the earnings forecast for CSPC Pharmaceutical Group (01093) for 2025 and 2026 largely unchanged, with the current stock price corresponding to a P/E ratio of 20.5x for 2025 and 17.3x for 2026. The target price is raised by 51.2% to HKD 13.00, reflecting an upside potential of 23.7% from the current stock price [1]. Group 1 - The company's 1H25 performance is in line with expectations, reporting revenue of CNY 13.273 billion, a year-on-year decline of 18.5%, and a net profit attributable to shareholders of CNY 2.548 billion, down 15.6% [2]. - The prescription drug business continues to face pressure, with 2Q25 prescription drug revenue at CNY 4.747 billion, a year-on-year decrease of 20.7% and a quarter-on-quarter decrease of 13.7%. The company anticipates improvement in 2H25 [3]. Group 2 - The company has established eight innovative R&D platforms and is expected to continue monetizing external licensing agreements. Notable agreements include ROR1 ADC with a maximum potential milestone of USD 1.225 billion, and AZ strategic cooperation with a maximum potential milestone of USD 5.22 billion [4]. - R&D investment is increasing, with 2Q25 R&D expenses at CNY 1.38 billion, accounting for 29.1% of prescription drug revenue, which is a year-on-year increase of 6.2 percentage points. The company is making progress in clinical trials for its key product SYS6010 (EGFR ADC) [5].

Core Viewpoint - CICC maintains the earnings forecast for CSPC Pharmaceutical Group (01093) for 2025 and 2026, with a target price increase of 51.2% to HKD 13.00, indicating a potential upside of 23.7% from the current stock price [1] Financial Performance - The company's 1H25 performance is in line with expectations, reporting revenue of CNY 13.273 billion, a year-on-year decline of 18.5%, and a net profit attributable to shareholders of CNY 2.548 billion, down 15.6% [2] Business Segment Analysis - The traditional pharmaceutical business continues to face pressure, with 2Q25 revenue of CNY 4.747 billion, a year-on-year decrease of 20.7% and a quarter-on-quarter decline of 13.7%. The decline is attributed to medical insurance cost control and inventory management [3] - Specific revenue breakdown includes: - Neurology: CNY 1.847 billion (YoY -27.0%) - Oncology: CNY 0.498 billion (YoY -53.5%) - Anti-infection: CNY 0.735 billion (YoY -23.2%) - Cardiovascular: CNY 0.457 billion (YoY -10.2%) - Respiratory: CNY 0.250 billion (YoY -13.5%) - Metabolism: CNY 0.229 billion (YoY -31.3%) - Other: CNY 0.374 billion (YoY +25.1%) - Licensing revenue: CNY 0.357 billion [3] Innovation and R&D - The company has established eight innovative R&D platforms and is expected to continue monetizing external licensing agreements. Notable agreements include ROR1 ADC and irinotecan liposome, with potential milestone payments totaling up to USD 1.225 billion [4] - R&D expenditure in 2Q25 reached CNY 1.38 billion, accounting for 29.1% of traditional pharmaceutical revenue, indicating a year-on-year increase of 6.2 percentage points. The company anticipates continued innovation output [5] - The clinical progress of the key product SYS6010 (EGFR ADC) is on track, with multiple clinical trials ongoing and a BLA expected in 2026 [5]

Group 1: Financial Performance - The company reported total revenue of 13.273 billion RMB, a year-on-year decrease of 18.5% [1] - Profit attributable to shareholders was 2.548 billion RMB, down 15.64% year-on-year, with basic earnings per share at 22.29 cents [1] - The gross profit margin decreased by 6.0 percentage points to 65.6%, primarily due to a reduction in the revenue share from the prescription drug business [1] Group 2: Research and Development - R&D expenses increased by 5.5% year-on-year to 2.683 billion RMB, accounting for 26.2% of prescription drug revenue [1] - The company has nearly 90 products in various stages of clinical trials, with 12 submitted for market approval and over 30 key products in the registration clinical phase [1] - The company focuses on high-demand treatment areas such as breast cancer and lung cancer, accelerating the commercialization of core products [2] Group 3: Strategic Initiatives - The company is implementing a "dual-driven" strategy of "innovation + internationalization," enhancing cooperation with global innovative pharmaceutical companies [2] - Authorization revenue reached 1.075 billion RMB in the first half of 2025, providing new growth momentum for the prescription drug business [2] - The company has completed four external authorization projects with a cumulative contract amount of 9.71 billion USD [3] Group 4: Global Expansion and Recognition - The company has been recognized as a "national-level innovative enterprise" and has established key national laboratories [4] - It ranks 19th in the global TOP25 pipeline scale pharmaceutical companies, improving its position by 5 places compared to the previous year [4] - The company is expected to submit over 50 new drugs or new indications for approval by the end of 2028 [4]

Core Viewpoint - CICC maintains the earnings forecast for CSPC Pharmaceutical Group (01093) for 2025 and 2026, with a target price increase of 26.5% to HKD 8.60, indicating a potential upside of 12.9% from the current stock price [1] Financial Performance - The company reported Q1 2025 results: revenue of CNY 7.015 billion (including BD revenue of CNY 718 million), down 21.9% YoY, but up 10.9% QoQ; net profit attributable to shareholders was CNY 1.478 billion (down 8.4% YoY, up 168.7% QoQ), and core net profit was CNY 1.411 billion (down 18.2% YoY, up 106.2% QoQ), aligning with CICC's expectations [2] Business Segment Analysis - Q1 2025 finished drug business faced pressure, with revenue of CNY 5.500 billion (down 27.3% YoY); specific segments included: CNS revenue CNY 1.908 billion (down 29.5% YoY), oncology CNY 552 million (down 65.7% YoY), anti-infection CNY 922 million (down 31.8% YoY), cardiovascular CNY 411 million (down 42.9% YoY), respiratory CNY 326 million (down 30.3% YoY), digestive metabolism CNY 299 million (down 4.7% YoY), and other finished drug products CNY 364 million (down 6.8% YoY); raw material drug revenue for Vitamin C was CNY 608 million (up 25.0% YoY) [3] Cost and Profitability Metrics - The company achieved a gross margin of 67.1% in Q1 2025 (down 5.2 percentage points YoY); the sales expense ratio improved to 23.7% (down 9.3 percentage points YoY), while the management expense ratio was 3.3% (down 0.4 percentage points YoY); R&D expense ratio was 23.7% (up 8.2 percentage points YoY), with expectations for annual R&D expenses to exceed CNY 5.5 billion [4] Innovation and Future Prospects - The company is optimistic about the clinical data readouts for key innovative products and the successful execution of BD transactions; SYS6010 (EGFR ADC) is under exploration with multiple clinical trials ongoing, and the company anticipates more significant BD transactions this year to enhance shareholder returns [5]